You are using an older browser version. Please use a supported version for the best MSN experience.

Data centres: Cash-strapped real estate industry exploring new avenues for growth

The Financial Express logo The Financial Express 26-01-2020 Rishi Ranjan Kala

The cash-strapped real estate industry is exploring new avenues as the residential segment continues to face headwinds. One such segment is the data centre business, which is witnessing unprecedented growth, as data consumption and generation is driving demand for more centres to store and maintain this resource.

© Getty

"Although data storage needs are currently being met by data centres across the globe, legislation on personal data privacy rights is considered to be the tipping point for growth of data centre industry," JLL India CEO & country head Ramesh Nair said.

The country's fast expanding e-commerce sector, use of smartphones and social media, government's focus on digital economy and rise in technology-driven start-ups led to rapid growth in usage and storage, increasing data centre space.

In addition, the entry of global cloud service providers is adding to space take-up, he added. As per Trai data, during FY19, India's total telecom subscriber base was 1.18 billion of which 1.16 billion were wireless subscribers. Internet subscribers stood at 636.73 million against 493.96 million a year-ago.

Broadband subscribers rose from 412.60 million to 563.31 million during the same review period. The average wireless data usage per wireless data subscriber per month stood at 9.06 GB, while the average cost to subscriber per GB wireless data was Rs 7.95.

The data centre industry is set to register three-fold growth in revenue to $3.2 billion by FY24 from $1 billion in FY19 and is likely to propel the development for additional real estate space of 7.8 million sq ft for setting up data centre facilities, JLL said in a recent report.

Indian data centre industry is expected to see 431 MW (IT power load) capacity additions during 2020-24 requiring a total power capacity addition of around 713 mega watt (MW). Based on industry benchmark of $4 million per MW, this would require an investment of $4.1 billion over the next five years. This investment excludes land costs, which differ across locations.

a screenshot of a cell phone © Provided by The Financial Express

Nair explained that India is witnessing an increasing interest for data centre facilities from enterprises and investors, both domestic and international. Lower real estate cost and skilled manpower, improving quality of power supply and adequate linkages globally with cable landing stations are driving multinational players to the country. 

JLL's India data centre head, Rachit Mohan said, "The anticipated data localisation bill, big data boom backed by IoT, and increasing OTT consumption is fuelling opportunity for large global and Indian co-location data centre operators to design and build high quality data centre infrastructure in India. This digital revolution has become a strong growth engine for the industry, and will continue to attract significant investments in the years to come".

The co-location data centre industry is estimated to have grown at a CAGR of 22% during FY14 to FY19 with industry revenue estimated at $1.052 billion in FY19.

Considering the potential of data centres, states like Maharashtra, Gujarat and Telangana are providing special incentives. Maharashtra has announced an integrated data centre policy with various incentives for developers and data centre operators. Telangana, which has attracted top global technology firms, has provided incentives by supporting infrastructure facilities and other benefits for industry players.

The major investments by the industry, which are in pipeline, includes Hiranandani's investment of $2.1 billion to develop data centres over five years and plans by Adani for mega data parks with $10 billion investments for which it has inked an MoU with US-based Digital Realty to develop centres. Besides, Colt data centre plans to build a 100 MW facility in Mumbai, JLL report revealed.

More From The Financial Express

The Financial Express
The Financial Express
image beaconimage beaconimage beacon